News Corp. in $139 Million Settlement With Shareholders

By AMY CHOZICK

April 22, 2013

As News Corporation continues to negotiate settlements with victims of a phone-hacking scandal within its British newspaper division, its board on Monday reached a $139 million settlement with a group of United States shareholders.

The group had asserted that News Corporation’s board — led by Rupert Murdoch, the chairman and chief executive — breached its fiduciary responsibility in handling the crisis in Britain.

The lawsuit also asserted that the company unethically paid $670 million in 2011 to acquire the Shine Group, the television production company of Mr. Murdoch’s daughter, Elisabeth Murdoch.

The suit was filed by Amalgamated Bank, the largest union-owned bank in the United States, which handles large-scale labor and pension funds.

News Corporation will not pay any of the $139 million settlement. Rather, the company will receive a payment from insurance that protects corporate boards from this type of litigation.

“We are proud of this historic settlement,” Edward Grebow, president and chief executive of Amalgamated Bank, said in a statement. The bank’s Longview Funds hold 455,343 Class A common shares of News Corporation.

News Corporation indicated that the settlement would move it one step closer toward distancing itself from the hacking imbroglio that erupted in 2011. “We are pleased to have resolved this matter,” News Corporation said in a statement.

“The agreement reflects the important steps News Corporation has taken over the last year to strengthen our corporate governance and compliance structure,” the statement added.

News Corporation has invested in building a compliance structure that will appease the Justice Department ahead of a meeting later this month to discuss phone hacking and bribery at its British papers.

In late June, the company is expected to split off its publishing assets — including its British newspaper arm — into a separate, publicly traded company. Entertainment and television assets like Fox Broadcasting and Fox News will form a separate company called 21st Century Fox.